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Archive for January, 2012


Posted on January 31, 2012 - by

“Merely useless”

CHARLEMAGNE files a dispatch from the latest EU summit:

Their compact—now called the “treaty on stability, co-ordination and governance in the Economic and Monetary Union”, has as its main aim the imposition of balanced-budget rules on members. This may be a useful discipline in good times. But many worry that, at a time of widespread crisis, such pro-cyclical rules risk imposing too much austerity too widely, thus darkening the spectre of recession and making it even harder to balance budgets. This may explain why leaders suddenly want to be seen talking about their plan (declaration is here in PDF) for growth and jobs, particularly in tackling the problem of youth unemployment.

Nevertheless, Angela Merkel, the German chancellor who had pushed hard for the treaty, hailed it as a great success. Many others, however, dismiss the compact with so much faint praise. “It is an important distraction”, says one diplomat. “It has gone from damaging to merely useless,” says a member of the European Parliament. Even Mario Monti, these days everybody’s favourite Italian, judged the compact little more than “a decorative songbird”.

Set aside, for the moment, are decisions about just what to do with Greece and how best to boost the euro zone’s “firewall” fund—the financial money pot needed to fend off attacks on troubled banks and sovereigns. On the latter score, there have been calls to merge the temporary European Financial Stability Facility with its permanent successor the European Stability Mechanism, in order to raise total firewall firepower to €750 billion. Meanwhile, total lending to banks through the European Central Bank’s long-term refinancing operations is likely to outstrip that figure after the second round of lending in February. And it would be difficult to argue that the LTRO hasn’t been the biggest factor in calming the euro crisis over the past two months.

As of December, euro-zone labour markets continued to deteriorate across the periphery while improving a bit in core countries; Germany’s unemployment rate dipped again, from 5.6% to 5.5%. Recent data indicate that while the euro-zone economy almost certainly shrank in the fourth quarter of 2011, it may well have resumed growing in the first quarter of this year.

The LTRO seems to have substantially slowed the credit crunch among euro-zone banks and contributed to a stablisation of the euro-zone economy. Whether that can continue is unclear. Some argue that banks will have met most or all of their funding needs for the year after the next round of ECB lending and will therefore lose their appetite for the sovereign-debt they can use as loan collateral. Yields may begin rising again, prompting a new panic. The Greece question remains a critical one, particularly given the deterioration in Portugal’s market position in recent weeks. And Europe continues to face a long adjustment period of high unemployment, austerity, and declining wages around the periphery. That’s a lot to survive, and unless the euro zone can survive, all of these agreements on budget rules won’t much matter.

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Posted on January 31, 2012 - by

RideSpring users at Fenwick & West


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Posted on January 29, 2012 - by

Please help business?

CASE STUDY
Simon & Sarah Drummond are qualified accountants, having completed their TAFE studies some years previously. In 2001, they commenced their own business “Books on the Run Pty Ltd” – a mobile accounting service operating in the North Eastern suburbs. Books on the Run advertise for a junior accountant to join the firm. Having recently gained your qualifications, you apply for & are successful in gaining the position (they are particularly impressed with thw fact that you have studies Legal Decision!).
1.During your 1st week of work you learn that Sarah is eager to impart her accounting knowledge to students Australia wide & she tells you that she has begun to write an accounting text book entitled “Figure it Out!” & is unsure as to how she would protect the Copyright. However, you also learn that although Sarah is enthusiastic to complete the text in the next 6 months, she has been pushed for time. As a result, she has been referring to an accounting text by another author (J M Hardy) & “just copying some of that”. Additionally, Sarah mentions that an ex-employee had written the 1st chapter of the book over which he was claiming copyright which she did not think he had a right to do.

2.Time passes & your probationary period at Books on the Run expires; you become a full time permanent employee. Simon Drummond, thinks it would be a good idea for you to have your own business cards, especially as you will be involved in a number of promotional events on behalf of the business in the next few months.
After you approve a proof of the anticipated card, the printer makes up the order & delivers the business cards that afternoon in addition to an invoice in the amount of $250.00. Unfortunately, when you open the box, you find that the cards have been water damaged & consequently the ink has run on the majority of them.
Simon immediately complains to the printer & refuses to pay the $250.00. He also demands that all the cards be replaced free of charge as they are not fit for the purpose.

3.The next day you arrive at the office to find Simon & Sarah in a state of panic – they have received a Court summons. On closer inspection you note they are infact being sued for a second hand car which they purchased from Sals Secondhand Autos a few months previously. It appears that the plaintiff on the summons, claims to be rightful owner (not Sarah & Simon) as Sal the motor dealer, was not authorized to sell the vehicle to them for a mount he did.

4.A few weeks afterwards, Simon decides to buy 2 new laptop computers from “Compugig” alarge retailer after he sees a special deal adverised in their latest catalogue (NEC laptops for just $1,199.00). He immediately rushes to Compugig only to be told by the sales assistant that they have “run out” of the “specials” but do have a more expensive model which would suitnthe needs of Books on the Run. Simon later hears from a reliable source that Compugig knew it had insufficient supplies to meet consumer demand.

5.You are about to finish work for the week & whilst you are getting ready to go home, you overhear Sarah talking in her office to Peter Bennets from “Accouting Plus” (a competitor of Books on the Run).
Sarah & Peter agree that as they have market share of the provision of mobile accounting services in the North Eastern suburbs they will increase their prices to $180.00 per hour. You notice subsequently that this does in fact happen.
6.On the Monday morning, Simon tells you that approximately 6 months ago, Books on the Run took a bad debtor, Fred Slack, to court to obtain $5,000.00 in unpaid debts for the provision of accounting services. Eventhough a final court oder was obtained against Fred, the $5,000.00 remains outstanding. Simon wishes to take matters further.

Instroductions:
Produce a formal report (using Harvard system of referencing) advising Sarah & Simon on the above scenarios. In particular you should focus on:
-The area(s) of law which you need to discuss;
-Legal principles & cases in support of those pinciples which you discuss;
-The likely outcome on each scenario;
-Address any possible breaches of the law (common & statute);
-Remedies (if applicable)
If the assessor believes you have not addressed all necessary criteria, you will be asked to rewrite the report. Retain your report on disk.


Posted on January 28, 2012 - by

Who has the most wiggle room?

BOTH the International Monetary Fund and the World Bank have recently warned that if the euro-area crisis worsens it could drag the world into another deep recession. If so, emerging economies would once again be hurt by falling exports and a drying up of capital inflows. This week’s Free exchange column examines which countries have the most fiscal and monetary firepower to boost their domestic demand.

The good news is that whereas most rich countries have little or no room to cut interest rates or to increase public borrowing, emerging markets as a group still have lots of monetary and fiscal firepower […] their average budget deficit last year was only 2% of GDP, against 8% in the G7 economies. And their general-government debt amounts on average to only 36% of GDP, compared with 119% of GDP in the rich world.

However, some governments have much more scope to loosen policy than others. We have ranked 27 emerging economies according to their monetary manoeuvrability and fiscal flexibility (you can compare the individual indicators we used here). Our overall “wiggle-room index” offers a rough ranking of which economies are best placed to withstand another global downturn. Countries are coloured in the chart according to our assessment of their ability to ease: “green” means it is safe to let out the throttle, “red” means the brake needs to stay on.

The index suggests that China, Indonesia and Saudi Arabia have the greatest room to support growth. At the other extreme, Egypt, India and Poland have the least room for a stimulus, thanks to excessive government borrowing, large current-account deficits, and uncomfortably high inflation. Brazil is also in the red zone. Unfortunately, some of the big economies where growth has recently slowed quite sharply, such as Brazil and India, have less room to ease policy than China, which has less urgent need to bolster growth.

On the other hand, China’s ample room for easing supports the case for a soft rather than a hard landing of its economy. That would be a huge relief given that China alone accounted for one third of global GDP growth last year.

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Posted on January 27, 2012 - by

Why Qiagen’s Earnings Are Outstanding

All cash flow is not created equal.

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Posted on January 27, 2012 - by

Business help please!!?

I have to answer all these questions and I dont know if theyre right. If someone could help me out with some of them that would be awsome!

1.) A case study involves:
a) using large samples
b) following a rigid protocol to examine a wide range of instances
c) an in-depth, longitudinal examination of a single instance or event
d) gathering as much data as possible about as many different types of companies as possible and forming generalizations from that data
I think d

2.) Which of the following rank among the primary concerns for small businesses in the USA?
a) Insurance costs, rising energy costs, and taxes
b) Excessive governmental red-tape
c) Restrictions on free trade
d) Natural disasters
I think a
3.) Which of the following is NOT a factor in the regional success of In-N-Out Burger?
a) reputation for adhering to the notions that fast food should be made from scratch
b) reputation for adhering to the notions that fast food should be made from scratch and that the whims of the customer should be entertained.
c) reputation for being active in local communities
d) reputation for its extensive menu, including chicken sandwiches and fish sandwiches in addition to burgers.
I think a
4.) How did Google begin?
a) A Ph.D. research project at Stanford
b) The idea for Google was originally developed by the Microsoft Corporation, but was discarded due to its perceived “lack of profitability.”
c) It was developed by two college drop-outs.
d) It was developed in Japan and adapted for the USA due to its success in its home country.
I think a
5.) The definition of ethics:
a) The philosophical study of persuasion.
b) The philosophical study of the nature of the universe.
c) The philosophical study of moral values and rules.
d) The philosophical study of logic.
I think c
6.) Ethics officers in business came about due to:
a) corruption and abuse scandals that afflicted the U.S. defense industry in the mid 1980s.
b) a famous memo penned by the CEO of Proctor and Gamble.
c) major business schools beginning to focus on business ethics in the mid 1980s.
d) the recent Enron scandal.
I think a
7.) Creative accounting is characterized by:
a) straightforward, yet aesthetically appealing, accounting procedure.
b) excessive complication and the use of novel ways of characterizing income, assets or liabilities.
c) a procedure unanimously agreed to be ethical.
d) its limitation to large firm and corporations.
I think a
8.) Which of the following is an example of systemic obsolescence?
a) Fashion
b) Computer Software
c) water filters that display a replacement notice after a predefined time
d) Selling VHS tapes while developing DVD players
I think d
9.) Which of the following is NOT a reason that corporations give to charities?
a) It improves company morale.
b) It increases the public opinion of a company.
c) Companies that contribute to charities are exempt from taxation.
d) It is good for the community.
I think c
10.) What is the wealthiest charitable foundation in the United States?
a) The Bill and Melinda Gates Foundation
b) Pew Charitable Trust
c) Rockefeller Foundation
d) Ford Foundation
I think c


Posted on January 25, 2012 - by

Angela Merkel would consider a euro-zone fiscal stimulus

A RECENT survey by the French research institute IFOP found that in the eyes of the French, Angela Merkel represents those values that are commonly associated with Germans (serious, disciplined, hard-working, sincere and so on). The study, which was commissioned by the German embassy in Paris, also reported that 62% of respondents thought that France should learn from German economic and social policies—although I am not sure about the framing of that question in French.

Ms Merkel herself disagrees with such stereotyping, as she reveals in a forthcoming interview with several European newspapers. However, she seems to agree that the rest of Europe should learn from Germany’s past economic policies. According to a preview of the interview (auf Deutsch) by the German Süddeutsche Zeitung, she argues that fiscal prudence, while a necessary prerequisite for more solidarity, is not enough. Troubled euro-zone countries also need to tackle reforms like improving labour market flexibility, and they must open up closed professions and businesses. This is a welcome shift of emphasis away from short-term austerity and towards medium-term fiscal prudence and growth-enhancing reform.

On top of that, she signalled her willingness to support fiscal stimulus in the euro zone. She proposes that unused European funds be deployed to support small and medium-sized enterprises (SMEs) as well as entrepreneurs and R&D in the affected countries. How that is supposed to work in practice, however, is less clear. It seems at least that this would take funds away from the regional development budget that invests a large share in Eastern European member states of the EU. Details aside, this would be a useful policy, as has been argued here before: if monetary policy—the usual stabilisation method of choice—is set externally or on a supranational level, fiscal policy does have a large impact on the economy. And because the downturn in, say, Portugal is also based on temporary factors, fiscal stimulus from the EU could help to limit the damage to the economy while it is adjusting.

Going into the summit, with pressure rising on Germany (for instance by the IMF), Ms Merkel may want some additional leverage to force countries to reform. As the exchange of binding fiscal rules for more German and ECB support shows, she may well get what she wants. The new deal would be: actual reforms (not mere promises) in return for regional fiscal stimulus that targets useful endeavours rather than an inefficient bureaucracy. If agreed on, this might be one of the most promising deals of this euro-zone crisis.

The interview will be published by El Pais (Spain), the Guardian (Britain), La Stampa (Italy), Le Monde (France), Gazeta (Poland) and Süddeutsche Zeitung.

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Posted on January 24, 2012 - by

Pass On Time Warner

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Posted on January 23, 2012 - by

What are loyalty bonuses that are given to employees? Please give me examples?

The phrase “Loyalty Bonus” was used in the Business and Management (IB) paper 1 case study 2009, Line 108


Posted on January 22, 2012 - by

Checking in on Europe

REGULAR readers know that my view of the likely outcome of the crisis in Europe is a gloomy one. This hasn’t changed. Given a number of positive developments in the euro zone—like fairly successful debt auctions for Spain and Italy, and corresponding drops in bond yields—it’s worth keeping a close eye on the situation to make sure that something important and positive hasn’t actually happened.

The European Central Bank’s introduction of its long-term refinancing operations late last year has had several significant effects on the dynamic in the euro zone. First, it had an immediate impact on the liquidity crunch that threatened to bring down the euro-area banking system. Banks that were having an increasingly difficult time rolling over the short-term financing they need to survive were given the opportunity to borrow huge amounts of money from the ECB at very low rates and fairly long—3 year—durations. Boy did they seize it. the first LTRO provided some €489 billion to European banks. The next round, to take place in February, may involve even more lending. For now, that seems to have removed a major, immediate threat to the euro zone.

Secondly, the ECB’s action took the air out of sovereign debt markets at a very fortuitous time. Lots of observers were very worried about the large amounts of debt Italy and Spain were scheduled to sell in the first month or two of this year. Bond yields were at or above unsustainable levels toward the end of 2011, and both Italy and Spain faced the risk of a fiscal death spiral. Intentionally or not, the ECB has helped shepherd these sovereigns through this period (so far, anyway) without adding too much to their long-run financing costs. How?

Well, the sovereigns weren’t the only ones needing to rollover a lot of debt early this year; banks, too, were facing a financing crunch. The ECB stepped in to assist in this situation, via its LTRO. And conveniently, it broadened its collateral rules so that banks could gobble up the new Spanish and Italian issuance, take it to the ECB as collateral, and take care of their financing needs. It’s a pretty neat little operation, when it comes down to it. Italian banks are estimated to have taken care of about 90% of their financing needs for 2012. Their rush to solve their own money problems helped the Italian government through a tight spot. Based on the way these activities have played out so far, the ECB’s LTRO looks like a big success.

My sense, however, is that Europe is a long way from being out of the woods. One problem is that because European banks have provided a lot of the demand for sovereign debt and European banks have already made big progress meeting their financing needs for this year, European bank demand for sovereign debt may be about to dry up. The ECB has bought time for the Italian and Spanish government, which matters, but it won’t be long before yields start rising once again. This is of particular concern given that the periphery continues to fall behind stated goals for fiscal consolidation.

A big reason that the periphery is missing those goals, of course, is the dire outlook for the euro-zone economy. So far, it’s tough to find signs that the easing of the bank funding crunch has translated into a rise in credit provision to the real economy of the euro-zone periphery. A lot of the liquidity directed to the banks has been parked back at the ECB as reserves. Many banks seem to be deleveraging by cutting loans to the private sector. While that’s the case, the euro-zone economy will continue to contract, and a long-term solution to the crisis will prove elusive. Many forecasters anticipate that euro-zone GDP will drop by around 1.2% in 2012 (with much larger declines in the hard-hit south). That could make for a nerve-wracking year.

Control over short-term interest rates is one of the ways the ECB knows that its monetary policy is being transmitted, and so the decline in short-term yields over the past couple of months has been very heartening. Spreads between short-term Spanish and Italian bonds and bunds are still elevated, however, and spreads for Ireland, Portugal, and Greece are huge (Portuguese spreads have gotten much worse in recent weeks). Financial conditions in those countries remain bleak at best.

Taking a step back, the ECB clearly did something momentous and positive late last year, and that’s the sole reason we’re now able to wonder whether a corner has been turned. The economic situation in the euro zone remains objectively bad, however. There will be a recession this year, there will be further episodes of market revulsion to peripheral debt, and Europe will have a hell of a time trying to figure out what to do with Greece and Portugal. Progress on the underlying fundamentals around the periphery, including growth, deficits, and current account balances, is occuring at a glacial pace. Muddling through isn’t out of the question, but muddling through does leave one vulnerable to unexpected shocks.

And it’s always the unexpected shocks that ruin the day. I think I’m a touch more optimistic about the euro zone now than I was in November of last year. All in all, that’s not saying much.

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